There’s Only One Solution That Might Fix Our Corrupt Financial System

The simple truth is our giant banking system is metastasizing throughout our economy. It’s sucking away our wealth. And it’s out of control – Published on AlterNet.org, by Les Leopold, August 14, 2012.

Americans want their pound of flesh, and rightfully so. We’ve seen our bankers commit every kind of financial crime imaginable.  They trade on insider information. They manipulate markets. They rig bets. They fix prices. They sell securities that are designed to fail so that they can bet against them. They launder money for rogue nations. They create too-big-to-fail banks that gamble with impunity knowing that we will bail them out again and again. And they collectively crashed the economy causing 8 million workers to lose their jobs.  

Wouldn’t it be lovely to see these financial felons doing the perp walk?

Sure, that might satisfy our desire for justice or even revenge, but it wouldn’t solve our banking problem. Neither would a return of Glass-Steagall, which would separate investment banking (the gambling part) from commercial banking (where our deposits are federally insured). And neither would a properly enforced Dodd-Frank legislation that was supposedly designed to prevent the next financial crash … //

… Back in the real world, banking casinos are like any other casino. They are designed to make money from money any way they can and as fast as they can. If they can rig a bet, they do it. (That in a nutshell is what the LIBOR scandal is all about.) If they can hoodwink a client by selling damaged goods, consider it done. If they can find ways to hide bets off the books, “don’t think twice, it’s alright.” Bending and breaking the rules is what they do. And if caught, they blame it on the guy below or the other bank across the street or the regulator who wasn’t doing his job, or maybe even the poor schlep homeowner who didn’t read the fine print.

Every time a bank is caught in one of these scandals (and every big bank has been caught), they point to their immaculate ethical policies that put the consumer first. They also brag about their sophisticated and rigorous risk management systems that are designed to prevent and contain the damage. Whatever happened, they claim, was a minor breach, an accident, a rogue trader, a bumbling manager or a misunderstanding. And those at the top are always insulated by plausible deniability.

But all of this dissembling is a cover for the obvious: too-big-to-fail banks are the predators and we are the prey.

And we’re talking about very big and powerful predators. (full text).

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